OPERATIONS AND SUPPLY CHAIN MANAGEMENT

Vol. 12, No. 2, 2019, pp. 100 - 111

ISSN 1979-3561 | EISSN 2759-9363

Modelling Facility Location Problems in Emerging

Markets: The Case of The Public Healthcare Sector
in Morocco

Asmae El Mokrini
Rabat Business School, BEAR-Lab,
International University of Rabat, Morocco
Email: asmae.elmokrini@uir.ac.ma

Youssef Boulaksil
College of Business and Economics,
UAE University, Al Ain, United Arab Emirates
Email: y.boulaksil@uaeu.ac.ae ; youssef.boulaksil@gmail.com (Corresponding Author)

Abdelaziz Berrado
Research team AMIPS, EMI,
Mohammed V University, Rabat, Morocco
Email: berrado@emi.ac.ma

mainly a result of environments where infrastructure

ABSTRACT
Locating facilities in an emerging market involves specific
characteristics that are different from developed countries. The
differences between these two settings suggest that facility
location modelling can present substantially different
challenges when applied to an emerging market as opposed to a
developed country. In this study, we develop a variant of the set
covering model that explicitly takes specific characteristics into
consideration. The model has been constructed and validated
based on a real-life case study concerning the Moroccan
Ministry of Health which is currently considering the redesign
of its supply chain of pharmaceutical products. Amongst the
findings, this paper shows that road infrastructure and demand
dispersion affect the strategic decision of facility locations.
Keywords: facility location, emerging economies, healthcare,
supply chain (re-)design
1. INTRODUCTION
The aim of facility location models is to develop an
appropriate network for improved reactivity and capacity of
the supply chain. Locating facilities inadequately can lead to
increased costs or bad customer service in industry.
Customer service can be greatly affected if the location of
facilities is not set appropriately, even if their number is
correctly determined (Daskin and Dean, 2005). Modelling
facility location problems is governed by the contextual
setting of the area under study. Literature shows that the
applications of location-allocation models are frequently
found in the context of developed countries [Amin and
Zhang (2013), Batta et al., (2014)]. However, applications to
emerging markets received little attention. Taking into
consideration the differences between these two settings,
location problems can be substantially different from facility
location models in developed countries. The difference is
configuration, society dynamics, technological capabilities,
maturity levels, and strategic purposes show significant
variances. We find that only few studies have taken specific
characteristics of emerging markets into consideration. The
aim of this study is to present a model that takes into
consideration specific characteristics that can present an
issue in an emerging market. Specifically, we would like to
know how road infrastructure type and demand dispersion
affects facility location decisions.
Optimization problems in healthcare have received
significant attention in the past few decades (Rais and Viana,
2011). In particular, our model has been applied to a real-life
case study that suggests a redesign for the pharmaceutical
supply chain of the Moroccan Ministry of Health. The
implications of poor location decisions in healthcare extend
well beyond cost criteria. As an emerging market, the
Moroccan health sector specificities and geographical setting
can impact how warehouses are located. Demand levels and
their distribution can also influence the decision. Amongst
the findings of this study, we show how infrastructure type
and demand dispersion affect the strategic decision of facility
location. The remainder of this paper is organized as follows.
In the next section, a review of relevant literature about
facility location models is presented, highlighting the
differences between emerging and developed countries. In
section 3, the proposed model is presented. In Section 4, the
case study is presented as well as its results and a sensitivity
analysis.
2. LITERATURE REVIEW
The literature on facility location models is rich; many
models have been developed to assist the decision maker in
deciding about the optimal location of facilities. Several
surveys and literature reviews present facility location
Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019
problems (Melo et al., 2009, Eiselt and Marianov, 2011,
Arabani and Farahani, 2012, Drezner and Hamacher, 2001,
Snyder, 2006), Şahin, and Süral, 2007). Facility location
models can be generally classified into these four categories:
analytical models, continuous models, network models, and
discrete models (ReVelle et al. 2008). Analytical
modelsdescribe systems as mathematical models by making
simplified assumptions regarding the demand distribution or
the cost structure of the network while giving exact solutions
(Mousavi et al, 2013). In continuous models, facilities can
be located at any point on a continuous space while demand
is typically concentrated in points (Carlsson and Jia, 2014).
The selection of sites for new facilities in discrete models is
limited to a finite set of available candidate locations (Nickel
and Gama, 2015; Kochetov, 2011; Schütz et al., 2008).
Network problems, on the other hand, present models where
facilities and customers are positioned on a network and
demand is typically associated to nodes (Daskin, 2011). In
approaching facility location problems in the specific context
of healthcare (e.g. Mousazadeh et al., 2018), the literature
shows that the three most used models are the location set
covering model, maximal covering model, and p-median
model (Daskin and Dean, 2005). The p-median model aims
at minimizing the travelling distance where the farthest
consumers can be put at disadvantage, which is usually
encountered in rural health facilities for developing nations
(Rahman, 1991). The coverage concept was first introduced
by Toregas et al. (1971). Using this approach, a customer can
be served if a facility is located within a given threshold
distance or travel time from it (Francis et al., 1992). This
threshold is called the coverage distance or coverage radius
(Fallah et al., 2009). Schilling et al. (1993) classify models
which use the concept of covering in two categories: 1) Set
Covering Problem (SCP) where coverage is required and
tries to minimize location cost while satisfying a specified
level of coverage. 2) Maximal Covering Location Problem
(MCLP) where coverage is optimized and maximizes the
amount of demand covered within the acceptable service
distance by locating a given fixed number of new facilities.
Facility locations models present differences from one
sector to another. For example, the private sector’s objective
is generally the minimization of costs or the sum of the
distances to the customers, while the public sector attempts
to apply fairness and equity to all citizens while minimizing
costs. Then, one of the aims would be the minimization of
the distance to the furthest customer. This means that
distances to other customers may increase so that all
customers benefit from a minimum covering distance (Eiselt
and Marianov, 2011). The problem of facility location
typically arises when dealing with network decentralization
decisions because such decisions require determining the
optimal number and locations of facilities (ex. Mitropoulos
et al., 2016). Several governments have attempted to
decentralize public facilities in order to increase citizens’
service performance levels (Common et al, 2016).
Decentralization has been a prominent organizational reform
in the government activities of emerging markets in recent
years and activities in many sectors, including health, have
been decentralized (Bossert et al., 2003; Thunhurst, 2012).
The effect of a given pattern of decentralization depends on
the context in which it occurs, including aspects of
geographical configuration, political accountability,
technical skill, and cultural norms. As a result, the same
101
reform can produce different results in different countries
(Roberts, 2011). Arney et al. (2014) state that the
pharmaceutical distribution system in particular in most
emerging markets has a different market structure compared
to developed countries. The main differences include a lack
of distribution networks with national reach, excessive
fragmentation and many small players, many intermediaries
between the manufacturer and the patient, and poor IT and
communication flow systems resulting in poor coordination
across actors in the distribution channel. Facility location
modelling can then be affected by the differences between
emerging markets and developed countries regarding the
nature of facilities and their sector of activity.
The literature shows several implementations of facility
location models pertaining to the healthcare sector in
developed countries (Beheshtifar and Alimoahmmadi, 2015;
Laporte et al., 2015; Haase and Muller, 2015; Han, 2014;
Khodaparasti et al., 2016). Drezner and Hamacher (2001)
state that the implementation of location-allocation problems
in emerging markets is different from that of developed
countries, mainly because of data limitation. In fact,
applications of facility location to emerging markets show
that several characteristics of these countries are taken into
consideration at the modelling stage such as travel time, level
of education, neighbourhood accessibility, etc. While studies
pertaining to developed countries usually include coverage
distance as the unique decision factor (Mitropoulos et al.,
2016). For example, Buor (2003) takes into consideration
distance in accessing health facilities in a rural district of
Ghana in relation to other factors such as travel time, cost
and level of education. Banerji and Fisher (1974) used the p-
median and set-covering model to hierarchically locate
facilities for integrated planning in micro-regions of rural
India. In another work, Eaton et al. (1981) applied the
maximal covering model to located ambulance bases and
centres from which to recruit rural health workers in
Colombia. Another study conducted in India used covering
tour models to determine planning mobile health services in
the Salcette region of Goa (Hodgson et al., 1998). In Rio,
Brazil, Galvão et al. (2002) strategically determined the
location of healthcare facilities in order to optimize maternal
and perinatal services. Bapna et al. (2002) also applied
location modelling in India to determine facilities settings of
unleaded petrol stations using optimization techniques. In a
study in Brazil, public schools’ locations were determined
for urban areas using locational analysis and GIS (Pizzolato
et al., 2004). Yasenovskiy and Hodgson (2007) presented
applications pertaining to the African country Ghana, for
determining the location of healthcare provision bases in
rural areas. They proposed a model that incorporates a spatial
choice interaction model attributing attendance and benefits
to facility size, distance, and neighbourhood accessibility.
Massam and Malczewski (2016) worked on determining the
location of health centres in a rural region of Zambia using a
decision support system. Another study presented a more
general case for planning of community health schemes by
non-governmental or faith-based organizations in rural areas
of developing countries, from both top-down and ground
level viewpoints (Smith et al., 2009). Rahman and Smith
(2000) provide a review of location-allocation models in
planning for healthcare facilities, presenting different
applications of mathematical models. They highlight the
differences between developed countries and emerging
 Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
102
markets stating that poor geographical accessibility is the
main reason why basic health care does not reach the
majority of the population in emerging markets. Examples of
their applications pertained to locating hospitals and
ambulance stations. In their review, Rahman and Smith
(2000) state that although existing mathematical models of
facility location are too sophisticated for use in emerging
markets because such setting can present barriers in
implementation. These models have demonstrated
usefulness in the facility location decision-making process;
however, they can face political and economic barriers. The
literature review shows that facility modelling has been
implemented in different ways in emerging markets, taking
specific characteristics that are relevant to each case. The
main differences in facility location between emerging
markets and developed countries are related to geographical
configuration (difference between urban and rural areas),
geographical accessibility, the sector of activity, and nature
of facilities. Although these differences have been
highlighted in the literature, their impact on the location of
facilities has not been studied. Table 1 presents a
summarized comparison between emerging markets and
developed countries based on characteristics that can affect
facility location decisions. The characteristics under
comparison are: geographical configuration, physical
infrastructure, technological infrastructure, availability of
information, funds and resources utilization, and market
maturity.
Several studies have suggested the negative effects of
emerging market characteristics on supply chain
management related to the lower quality and availability of
infrastructure and resources play an important role in the
selection of strategic locations (Lorentz et al., 2013).
Emerging markets also present differences compared to
developed countries concerning geographical accessibility
caused by the differences between rural and urban areas’
infrastructures (Khanna and Palepu, 2013). These markets
are generally more rural and present a big gap between rural
and urban areas regarding accessibility and resources
whereas developed countries are highly urbanized (Lorentz
et al., 2013). This gap between rural and urban areas also
affects demand dispersion of facilities as urban areas are
more populated. Facility location models present in the
literature take into consideration different influencing factors
such as opening costs, transportation costs, inventories,
demand volumes. In our literature study, we did not come
across models that use the road infrastructure type explicitly
as an input parameter when designing the network. In
addition, the literature on facility location models in
emerging markets shows that models have been mainly
developed based on problems that exist in developed
countries which is not particularly useful when dealing with
the case of an emerging market failing to take into
consideration the differences ins road infrastructure types
and demand dispersion. While applications of facility
location models to emerging markets have taken into
consideration characteristics of these countries, no attention
has been given to demonstrating how these differences affect
facility location results. This study aims at determining how
differences such as road infrastructure type and demand
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019
dispersion affect the results of facility location with an
application to a case study of the Moroccan public
pharmaceutical supply chain where these characteristics may
present an issue.
3. MODEL DESCRIPTION
Our solution approach consists of determining the candidate
locations for facilities first and determining optimal locations
by solving the developed mathematical model. The first step
of the proposed model approach is to determine candidate
locations for facilities through geographical modelling. For
the purposes of this study, we selected the set covering model
and adapt it to take into consideration characteristics of
emerging markets. The investigation of literature concerning
the specificities of emerging markets led to choosing road
infrastructure type and demand dispersion as the main
characteristics on which the coverage distance would
depend. The aim is to assess how these characteristics affect
the location modelling in the case of an emerging market.
Solving the problem allows determining the optimal number
and location of facility locations resulting in a network
configuration that satisfies the different requirements of the
problem. Finally, we conduct a sensitivity analysis where
different scenarios are built to show how the number of
warehouses and the network configuration change when
varying coverage distances taking into consideration road
infrastructure type and demand dispersion.
3.1 Determining the Candidate Locations
The first step of the solution approach is to discretize
the location problem to determine candidate locations.
Typically, location problems in continuous spaces are
modelled using nonlinear optimization problems (where the
nonlinearity derives from the Euclidean-distance function),
it is shown how standard covering problems can be reduced
so as to allow a discrete search (Eiselt, 2004). Therefore,
instead of iteratively searching for good solutions in
continuous location problems, like many algorithms or
heuristics do, it is suggested to identify a finite set which
consists of at least one optimal solution. This finite set is
known as the Finite Dominating Set (FDS) (Murray et al.,
2008). By examining the finite set, instead of the infinite
space, search effort can be reduced dramatically. Hakimi
(1964, 1965) was the first to investigate the FDS for a
network location problem. He proved that nodes of the
network comprise an FDS for the p-median problem.
Church (1984) developed an approach for identifying
the FDS for covering problems involving point-based
demand for both Euclidean distance and rectilinear distance.
The FDS is a set of intersection points of the circles with
radius of the service standard centred on the demand
locations, known as the circle intersection point set (Figure
1). In order to find the FDS for this model, we use GIS
(Geographic Information System) modelling tools to create
buffers around demand centres with distances measured on
the road network. The FDS can be reduced using aggregation
methods. The output of this process is a set of coordinates for
candidate locations.
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Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019 103

Table 1 Differences Between Emerging Markets and Developed Countries

Characteristics
Geographical configuration
Physical infrastructure
Technological infrastructure
Availability of information
Funds and resources
utilization
Market maturity
Main differences References
Emerging markets are generally more rural and present a big Lorentz et al. (2013)
gap between rural and urban areas whereas developed
countries are highly urbanized
Developed Countries have good infrastructure including roads Ibrahim and Damasceno (2012)
and transportation means. Whereas the quality and availability of Smith et al. (2009)
this infrastructure is moderate to poor in emerging markets. Yasenovskiy and Hodgson (2007)
Developed countries have higher technological capabilities, Arney et al. (2014)
available telecommunications networks and communication flow Hlyal, et al. (2015)
systems compared to emerging countries.
Emerging markets have less available information and struggle Drezner and Hamacher (2001)
with data limitation compared to developed countries.
Resources are effectively and efficiently utilized in developed (Rahman, 2000)
countries whereas this utilization of resources is poor in
emerging markets.
Developed Countries are prosperous compared to emerging Khanna and Palepu (2013)
markets which are on the path of industrialization. Kvint (2009)

both demand dispersion and infrastructure type, Rj becomes

a matrix of n*m values. The mathematical formulation of the
model is presented below.

Input parameters
J : Set of demand points
I : Set of candidate locations
𝐷𝑖𝑗 : Distance from facility i to demand point j
𝑓𝑖 : Opening cost of facility i
𝑃𝑗 : Category index for demand priority of demand point j
𝑃𝑗 = [1, . . 𝑚] , 𝑚 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑎𝑡𝑒𝑔𝑜𝑟𝑖𝑒𝑠
𝑇𝑗 = Category index for road infrastructure type of demand
point j
𝑇𝑗 = [1, . . 𝑛], 𝑛 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑎𝑡𝑒𝑔𝑜𝑟𝑖𝑒𝑠
𝑑( 𝑃𝑗 , 𝑇𝑗 ) = Coverage distance function for index 𝑃𝑗 and
index 𝑇𝑗
Figure 1 Circle Intersection Point Set (Mehrez, 2016) 𝑑11 𝑑12 … 𝑑1𝑚
𝑑 𝑑22 … 𝑑2𝑚
𝑑 ( 𝑃𝑗 , 𝑇𝑗 ) = [ 21 ]
3.2 Determining Optimal Locations … … … …
The second step of our approach is the mathematical 𝑑𝑛1 𝑑𝑛2 … 𝑑𝑛𝑚
modelling of the problem with the objective to select the 𝑅𝑗 = 𝑑( 𝑃𝑗 , 𝑇𝑗 ) = Coverage distance required by demand
optimal facility locations from the candidate locations. point j
Following the mainstream in the literature, we opted for a set 1 𝑖𝑓 𝐷𝑖𝑗 ≤ 𝑅𝑗
𝑎𝑖𝑗 = {
covering model (Farahani et al., 2012). The problem seeks 0 𝑜𝑡ℎ𝑒𝑟𝑤𝑖𝑠𝑒
to identify a minimal set of facilities and their locations so
Decision variable
that all demand points are covered. The objective is to 1 𝑖𝑓 𝑤𝑒 𝑙𝑜𝑐𝑎𝑡𝑒 𝑡ℎ𝑒 𝑤𝑎𝑟𝑒ℎ𝑜𝑢𝑠𝑒 𝑎𝑡 𝑐𝑎𝑛𝑑𝑖𝑑𝑎𝑡𝑒 𝑙𝑜𝑐𝑎𝑡𝑖𝑜𝑛 𝑖
determine the location of facilities to cover a given set of 𝑋𝑖 = {
0 𝑜𝑡ℎ𝑒𝑟𝑤𝑖𝑠𝑒
demand points, such that each demand point is served by a
facility within a maximum service distance Rj. The set Optimization model
covering model minimizes the opening cost of the facilities Minimize ∑𝑖∈𝐼 𝑓𝑖 𝑋𝑖 (1)
that are selected such that all demand nodes are covered. The Subject to:
special feature of this model is that the coverage distance Rj ∑𝑖∈𝐼 𝑎𝑖𝑗 𝑋𝑖 ≥ 1 ∀𝑗 ∈𝐽 (2)
is a function that takes into consideration the emerging
market characteristics. The coverage distance Rj will vary The objective function (1) minimizes the total facilities’
according to the demand points’ dispersion and road cost. Constraint (2) stipulates that each demand node must
infrastructure type. Demand priority is represented by an be covered by at least one of the selected facilities. Finally,
index Pj that can take values 1 to m. For example, demand constraint (3) ensures that 𝑋𝑖 is a binary variable. Kindly
can be categorized to high, medium, or low priority thus note that Rj is a function of the parameters Pj and Tj, which
resulting in 3 varying values for Rj. In the same manner, the denote the ‘demand priority’ and ‘road infrastructure type’
road infrastructure type Tj is an index that can take value 1 to respectively, which affect the optimal facility locations via
n. For example, these categories can be good, medium, and the parameters aij.
bad road infrastructure type. When taking into consideration
 Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
104
4. CASE STUDY
The model presented earlier has been applied to the
case study concerning the redesign of the Moroccan public
pharmaceutical supply chain. Pharmaceutical products
represent nearly 40% of the overall government’s expense of
healthcare in Morocco. In the public sector, the Ministry of
Health has allocated in 2013, more than two billion USD in
medicines and health care products. However, despite efforts
to date in connection with the supply of drugs and medical
devices in terms of cost reduction (joint purchasing) and
quality assurance (norms and standards), the availability of
these products in public health institutions is worrying as
patients do not fully benefit from these efforts (MOH report,
2014). Since the expansion of the medical assistance scheme
in 2012, a large portion of the Moroccan population has
access to free medical care and services; which resulted in a
significant increase of the number of patients and purchased
pharmaceuticals. At present, the annual budget allocated for
the purchase of pharmaceuticals is over 200 million USD;
this amount has increased by nearly 567% over a 10 years
period. Several assessments of the supply chain of the current
pharmaceutical products demonstrated the saturation of the
logistical system and its inadequacy to the new challenges
faced. Given that the distribution system has not experienced
significant growth for the past decades, it has now become
saturated due to a lack of capability to effectively manage
and distribute the current amount of pharmaceuticals.
Several operational problems associated with the distribution
network have erupted. They include stock-outs that takes a
long time to replenish, the expiry rate of pharmaceuticals not
delivered or used, the unavailability of these products at the
right time and the right place patients, and the lack of
responsiveness of the network design. These problems are
mainly caused by the fact that there is a central distribution
configuration which delays the distribution process towards
the numerous demand points. One significant inconsistency
in the supply chain is then related to the centralized storage
system. The aim of this study is to suggest a redesign of the
pharmaceutical storage system by applying our model to
increase the reactivity of the supply chain.
Figure 2 presents the structure of the Moroccan public
pharmaceutical supply chain. The system includes a number
of product suppliers who deliver to one main warehouses
(holding 80% of the total inventory) and 3 secondary ones.
These warehouses are all located in the region of Casablanca,
Morocco’s biggest city and the economic capital of the
country. Pharmaceutical products are then delivered to
public pharmacies that are located in 78 provincial and
regional hospitals, and 83 provincial health delegations
which deliver to 2759 basic health centres (ESSP)
geographically distributed over the country. All products are
distributed by small trucks or small vans, especially
upstream in the supply chain. At the downstream level, that
is the distribution to the provincial hospitals, delegations,
and basic healthcare facility, smaller vans and cars are
typically used as transportation mode. The majority of
delegations happen to be located right next to regional or
provincial hospitals. Information flow pertaining to orders
and distribution management happens between the supply
division and demand points (hospitals and delegations), as
well as pharmaceutical suppliers.
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019
As an emerging market, Morocco’s geographical
structure shows differences between urban and rural areas.
Facility location applications to the public sector and
healthcare in Morocco have not been addressed in the
literature before. In fact, the models pertaining to the
Moroccan context are not useful to our case study as they
have been concerned with small scale areas of either the
private sector or the specific case of renewable energies, and
they do not demonstrate the impact of emerging market
characteristics on facility location results.
Figure 2 Pharmaceutical Supply Chain Structure
4.1 Data Collection
Data for this study were provided by the Ministry of
Health in Morocco. We started with a study and analysis of
the existing distribution network on the physical and
information systems, and then collected data related to
demand quantities, which were shared by the Ministry of
Health. We were able to conduct multiple interviews with the
Ministry of Health personnel in different sites such as
warehouses and hospital pharmacies. It is the Procurement
Division of the Ministry of Health that is responsible for
supplying pharmaceuticals to the public sector. Its mission is
to ensure the execution of expenditure of pharmaceutical
products to Directions, Delegations, Hospitals and
Healthcare Centers. These pharmaceutical products occupy
a considerable place in the Moroccan health system, they
alone account for 31.7% of total health expenditure (National
Health Accounts, 2013). The demand data that we obtained
include a database of all medicines that the government
supplies to patients via the regional and provincial hospitals
and delegations. The supply of pharmaceutical products
expressed by the 158 health units in the country (including
81 delegations with 2,750 basic healthcare establishments
and 144 hospitals) is met by the delivery of around 25000
tons, comprising a number of units between 40 and 50
million boxes coming from more than 60 suppliers and
service providers. Pharmaceuticals contain over 1050
references of medicines, medical devices and laboratory
reagents. These medicines include pain relief, vaccinations,
antibiotics, and other basic medicines which the government
considers important to be available to all citizens. The
ministry also shared the number and exact locations of all
healthcare centers. On the other hand, data concerning road
infrastructure was retrieved from the Moroccan Ministry of
Equipment and Transportation.
Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019
The calculation of the opening cost fi is based on the
land price and construction costs per squared meter for a
typical pharmaceutical warehouse. Existing facilities were
given an opening cost of fi = 0. For other candidate locations,
land price depends on their locations and was retrieved from
the real estate price benchmarks provided by the General Tax
Directorate of the Ministry of Economy and Finance.
Construction costs, on the other hand, are considered equal
across the country.
The priority index Pj of demand points was determined
based on the demand quantity for pharmaceuticals for each
healthcare centre. Demand points that serve a large portion
of the population require larger quantities of pharmaceutical
products and have a high turnover rate. Consequently,
replenishment of these demand points requires a higher
number of trips to deliver the products, which results in
higher transportation costs. Demand data for hospitals and
delegations is available as an aggregate sum of the number
of boxes. For the purposes of this case study, the priority
index has been set equal to 3 different values: “high priority”,
“medium priority”, and “low priority”. The cut-off points
were selected dependent on the ranking of the demand
volume of each demand point, ensuring a more or less equal
number of demand points in each category. In order to
determine the priority index of a demand point, the following
steps have been performed:
1- Aggregate demand values for regional/provincial
hospitals and delegations. This resulted in a total of 81
demand points.
2- Rank these demand values in descending order
with (1) being highest demand and (81) the lowest.
3- Determine the cut-off points for the priority index
Pj, by subdividing the ranking to 3 parts of equal sides:
𝑃𝑗 =
1 “High priority” 𝑖𝑓 demand ranking is from (𝟏) 𝐭𝐨 (𝟐𝟕)
{ 2 “Medium priority” 𝑖𝑓 demand ranking is from (𝟐𝟖) 𝐭𝐨 (𝟓𝟒)
3 “Low priority” 𝑖𝑓 demand ranking is from (𝟓𝟓) 𝐭𝐨 (𝟖𝟏)
We are aware that different cut-off points could have
been selected but we believe that by doing so, at least, we
ensure that some priority is given to demand point areas
where demand and consumption of pharmaceuticals is high
and requires frequent replenishment.
The road Infrastructure type of demand points was
determined from the data gathered concerning road networks
in Morocco from the Ministry of Equipment and
Transportation. This data compares the Moroccan regions
with values for the number of km of paved roads, non-paved
roads, and their percentages compared to total national roads
for every location. The road infrastructure RI ratio has been
calculated as follow:
𝑅𝐼 𝑅𝑎𝑡𝑖𝑜 (𝑓𝑜𝑟 𝑒𝑎𝑐ℎ 𝑟𝑒𝑔𝑖𝑜𝑛)
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑟𝑜𝑎𝑑 𝑘𝑚𝑠 𝑛𝑜𝑛𝑝𝑎𝑣𝑒𝑑
= In order to evaluate the model, we created 3 sets of
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑟𝑜𝑎𝑑 𝑘𝑚𝑠 𝑝𝑎𝑣𝑒𝑑
When calculating the RI ratio for all regions in the
country, it enabled us to determine two cut-off points (RI =
15% and RI = 40%) for the RI ratio. Therefore, a region with
an RI ratio less than 15% was considered to have a good road
105
type and a RI ratio that exceeds 40% represented a region
with bad road type, values in between were classified as a
region medium quality of road infrastructure. Finally, the
road type index Tj takes three values according to the RI ratio
distribution as shown hereafter:
1 𝑖𝑓 𝑹𝑰 ≤ 𝟏𝟓%
𝑇𝑗 = { 2 𝑖𝑓 𝟏𝟓 % < 𝑹𝑰 ≤ 𝟒𝟎%
3 𝑖𝑓 𝑹𝑰 > 𝟒𝟎%
4.2 Results
The purpose of the model is to determine the optimal
locations of warehouses to cover all healthcare demand
points such that each one is served by a facility within a
maximum coverage distance. The mathematical model is
modelled in the General Algebric Modeling Systems
(GAMS) software and solved using Cplex solver. The use of
GIS modelling tools in conjunction with the optimization
program was used for computing data to determine distances
and create buffers, or areas of influence, around centres with
distances measured on the road network.
4.2.1 Determining candidate locations
The GIS system was used to find candidate locations
according to the coverage distance using intersection points
of the buffers in addition to the current location of hospitals.
In order to reduce the number of candidate locations,
intersection points that fall into a small perimeter were
aggregated. Figure 3 shows the buffers (3a), the intersection
points and the areas of aggregation (3b) and the final
candidate locations (3c), respectively.
4.2.2 Determining optimal warehouse locations
The set covering model presented in section 3.2 is
applied to the Moroccan facility location case with sets of 81
demand points and 49 candidate locations. An integer
optimal solution was found by using the branch and cut
algorithm. The distances between candidate locations and
demand points were calculated according to the Vincenty
formula. There are several ways to calculate great circle
distances, including spherical law of cosines, Harversine
(Earth as sphere), and Vincenty (Earth as Ellipsoid)
formulas. When dealing with populated areas, the rectilinear
(Manhattan distance) is more accurate than the Euclidean
distance. However, when calculating distances over large
areas or using latitude and longitude coordinates, distance
measurements should be calculated along the curved surface
of the earth (great circle distance) (Boscoe, 2013). The
Vincenty formula is the most accurate up to date formula that
calculates distances between a pair of latitude/longitude
points on the earth’s surface, using an accurate
ellipsoidal model of the earth. The distance between
candidate location and demand point for our model was
calculated using the Vincenty formula (See Appendix A.)
numerical experiments: a base scenario and 2 other sets
where demand dispersion and infrastructure type are taken
into consideration respectively. The base scenario represents
 Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
106
a b
Figure 3 Candidate Warehouses Location
the classic set covering with an identical coverage distance
for all demand points. Road type and demand dispersion are
not taken into account in this case. By this first set of results
(Table 2), we want to portrait scenarios where 150 km is the
average coverage distance. The optimal configuration of the
base scenario is illustrated in Figure 4. We can see that 11
warehouses will be opened and distributed evenly around the
areas where hospital centres are located.
Table 2 Summary of Results
Scenario Number of warehouses
Scenario 1 : Base scenario 11
Scenario 2 15
Scenario 3 16
Figure 4 Optimal Warehouse Location for Base Scenario
In the second scenario, demand dispersion was taken
into consideration and the coverage distance is set to 150 km
with a range of 100 km. That means that the distances for
high, medium, and low demand dispersion are 100, 150, and
200 km respectively. Figure 5 shows the results where 15
warehouses are built taking into consideration different
demand priorities. Compared to the base scenario, more
warehouses are suggested in the south of Morocco.
Figure 5 Optimal Warehouse Location for 2nd Scenario
In the third scenario where infrastructure type is taken
into consideration, 16 warehouses opened. Figure 6 shows
the locations of these warehouses. We can see that the
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019
c
warehouses are closer to areas where infrastructure is bad,
and further from the areas where road infrastructure is good
such as the far north or the northern east of Morocco. On the
other hand, the southern part has a lower infrastructure
quality compared to the north, which explains the location of
warehouses closer to demand points.
Figure 6 Optimal Warehouse Location for 3rd Scenario
4.2.3 Sensitivity analysis
In this section, we present the sensitivity analysis. We
are interested in knowing how coverage distance, demand
dispersion, and infrastructure type impacts the optimal
network configuration. Scenarios were first constructed
around the base scenario varying the coverage distance from
150 km to 400 km. Taking into consideration demand
prioritization and road infrastructure type, 8 scenarios were
constructed where coverage distance varies from 150 km to
350 km while the range difference is either 100 or 200 km.
Table 3 summarizes the experimental design and presents
the optimal number of warehouses. By varying the coverage
distance, not taking into consideration demand and
infrastructure type. Figure 7. shows how the number of
warehouses varies as the coverage distance decreases
(Figure 7).
Number of warehouses vs.
Coverage distance
15
n° of warehouses
10
0
150 200 250 300 350 400
Coverage distance (km)
Figure 7 The Relationship Between the Number of Warehouses
and the Coverage Distance
Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019 107

Figure 8 illustrates the results of scenarios 8, 9, 12, and
13, which take into consideration demand dispersion with a
coverage distance varying from 150 km to 350 km and a
range of 100 km. The results show that warehouses shift to
urban areas when demand is high. In addition, the number of
warehouses varies as the coverage distance is varied as
shown in Figure 9.
Another set of 8 scenarios were constructed by varying
the road infrastructure type along with the coverage distance
from 150 to 350 km and the range, taking values of 100 and
200 km (Figure 9 and 10). The results show how the optimal
number of warehouses changes when the coverage distance
is varied. The number of warehouses becomes larger when
the range is high. Except when the number of warehouses
reaches 3, then the range doesn’t show any difference in the
results. The map representation in Figure 11 shows the
results for scenarios 16, 17, 20, and 21 where the range is
100. The location of warehouses shifts to regions that are less
urbanized since they present accessibility priority due to a
smaller coverage distance.

Table 3 Summary of the Experimental Design and Result

Average Demand
Distance Infrastructure Type Number of
Scenario coverage dispersion
Range (km) (Yes=1, No=0) warehouses
distance (km) (Yes=1, No=0)

1 150 0 0 0 11
2 250 0 0 0 7
3 300 0 0 0 4
4 350 0 0 0 3
5 400 0 0 0 3
6 150 100 1 0 15
7 200 200 1 0 12
8 200 100 1 0 9
9 250 100 1 0 7
10 250 200 1 0 8
11 300 200 1 0 7
12 300 100 1 0 5
13 350 100 1 0 3
14 150 100 0 1 16
15 200 200 0 1 14
16 200 100 0 1 8
17 250 100 0 1 6
18 250 200 0 1 7
19 300 200 0 1 5
20 300 100 0 1 5
21 350 100 0 1 4
22 300 100 1 1 5
23 350 200 1 1 5
24 450 200 1 1 4
25 450 400 1 1 6
 Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
108 Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019

We also investigated scenarios 22 to 25 where both

demand dispersion and infrastructure type are combined in
the coverage distance function. This distance then depends
on both demand dispersion and road infrastructure type. The
proposed example shows a matrix having “high, medium,
low priority” for demand and “good, medium, bad” for road
200 km 250 km types. Tables 4 to 7 present coverage distance values used to
select the appropriate coverage distance depending on the
two factors. The results of these scenarios are presented in
Figure 12. The results for scenario 22, where the coverage
distance varies between 200 and 400 km, give 5 optimal
locations, 4 of them located in the northern part of the
country. This can be explained by the high demand of public
health centers in that region compared to the south, which is
geographically less populated. In scenario 23, the coverage
300 km 350 km distance varies between 150 km and 550 km with a 350 km
Figure 8 Map Representation of Warehouses Based on Demand average and a 200 km range. We notice that the number of
Dispersion (Scenarios 8, 9, 12, and 13) warehouses increases in the south part of the country
compared to the northern west part where demand is high
because road infrastructure type is good in these areas where
20
most big cities are located. In scenario 24, the coverage
N° of warehouses

15 distance increases and the number of optimal warehouses

10 decreases to 4. When we increase the range and the coverage
Infrastructure Type values vary between 150 km and 850 km, the results show
5
0 Demand Priority that the number of warehouses increases. This can be
150 200 200 250 250 explained by the fact that the number of areas where the road
infrastructure type is bad and medium outweighs areas that
have good road infrastructure.
Coverage distance (km)
Figure 9 Number of Warehouses for Range 100 Km Table 4 Coverage Distance Values for Scenario 22
Demand Priority
Road Infr. Pj=1 Pj=2 Pj=3
15
(HIGH) (MEDIUM) (LOW)
N° of warehouses

10
Tj=1 (GOOD) 300 km 350 km 400 km
5 Infrastructure Type Tj=2 (MEDIUM) 250 km 300 km 350 km
0 Demand Priority Tj=3 (BAD) 200 km 250 km 300 km
200 250 300
Table 5 Coverage Distance Values for Scenario 23
Demand Priority Pj=1 Pj=2 Pj=3
Coverage distance (km) Road Infr. (HIGH) (MEDIUM) (LOW)
Figure 10 Number of Warehouses for Range 200 Km
Tj=1 (GOOD) 350 km 450 km 550 km
Tj=2 (MEDIUM) 250 km 350 km 450 km
Tj=3 (BAD) 150 km 250 km 350 km
Table 6 Coverage distance values for Scenario 24
Demand Priority Pj=1 Pj=2 Pj=3
Road Infr. (HIGH) (MEDIUM) (LOW)
Tj=1 (GOOD) 450 km 550 km 650 km
200 km 250 km Tj=2 (MEDIUM) 350 km 450 km 550 km
Tj=3 (BAD) 250 km 350 km 450 km

Table 7 Coverage distance values for Scenario 25

Demand Priority Pj=1 Pj=2 Pj=3
Road Infr. (HIGH) (MEDIUM) (LOW)
Tj=1 (GOOD) 450 km 650 km 850 km
Tj=2 (MEDIUM) 250 km 450 km 650 km
300 km 350 km Tj=3 (BAD) 150 km 250 km 450 km
Figure 11 Map Representation of Warehouses Based on
Infrastructure Type (Scenarios 16, 17, 20, and 21)
Mokrini et al: Modelling Facility Location Problems in Emerging Markets: The Case of the Public Healthcare Sector in Morocco
Operations and Supply Chain Management 12(2) pp. 100 - 111 © 2019
Scenario 24 Scenario 25
Scenario 22 Sceanrio 23
Figure 12 Optimal Warehouse Locations for Scenarios 22 to 25
The results show that the network configuration is
substantially different when demand dispersion and
infrastructure type are taken into consideration separately.
Warehouse locations are distributed rather evenly across the
country area for the base scenario. On the other hand, they
tend to shift to areas where healthcare centers are closely
distributed when taking into consideration demand, and
further away from urban areas where infrastructure is good
when taking into consideration infrastructure type. When
both coverage distance and demand dispersion are varied,
warehouses shift to urban areas because hospitals are mainly
located in these areas. Varying the coverage distance and
infrastructure type causes the warehouses to shift to regions
that are less urbanized since the infrastructure type in these
areas is medium to bad and therefore requires longer travel
times. In the case where coverage distance is varied along
with demand dispersion and infrastructure type, the number
and location of warehouses depends on the average distance
and the range. When the range increases, the resulting
warehouses are spread all over the country, balancing urban
areas in the north where demand is high and bad
infrastructure type which is mainly present in the south.
When the range is small, warehouses are mostly located in
the northern part of the country because of the high number
of public hospitals in this area, which outweighs the
infrastructure bad type in the regions of the remaining
hospital centres.
5. CONCLUSION
In this paper, we presented a facility location model that
takes into consideration specific characteristics of an
emerging market. The model proposes a variant of the set
covering problem. The literature study concerning the
specificities of emerging markets led to choosing
infrastructure type and demand dispersion as characteristics
on which the coverage distance would depend. The aim is to
assess how these characteristics affect the location
modelling. The model has been applied to a real-life case
study that we conducted to redesign the Moroccan public
pharmaceutical supply chain in collaboration with the
Moroccan Ministry of Health. In that case study, the
objective was to determine the optimal number and locations
of pharmaceutical warehouses while taking into
consideration different requirements of the problem. Given
that the current warehouse for pharmaceuticals is saturated,
109
the problem consists of finding the optimal locations of
warehouses around the country and assigning them to
national hospitals and health centres in order to ensure that
the pharmaceutical product arrives to the patient at the right
time and in the right quantity. The sensitivity analysis shows
how the number of warehouses and the network
configuration change when varying coverage distances
taking into consideration road infrastructure type and
demand dispersion. The results show that the number of
warehouses and their location depends on the road
infrastructure type and demand dispersion. Warehouses shift
to urban areas where demand is high and to regions that are
less urbanized since they present accessibility priority due to
a smaller coverage distance. Our study shows that ignoring
road infrastructure type and demand dispersion results in a
substantially different solution to the network configuration.
This implies that these characteristics should be taken into
consideration when dealing with an emerging country
setting.
Our proposed approach can help decision makers
understand the importance of selecting appropriate solution
approaches to solve facility location problems in emerging
markets in general and in the special case of the public sector.
Also, this model can be implemented by researchers and
decision makers and extended and/or adapted to take into
account other characteristics related to their respective
problem setting. One limitation of this study was related to
the unavailability of data concerning other emerging markets
as the project was only applied to Morocco and more studies
are needed to generalize the results. Our future research will
be directed towards including other characteristics such as
political and governmental constraints as well as budget
constraints in the model.
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APPENDIX A
Distance (A, B) = ACOS (COS(RADIANS(90 − Lat1)) ∗ COS(RADIANS(90 − Lat2)) + SIN(RADIANS(90 − Lat1)) ∗
SIN(RADIANS(90 − lat2)) ∗ COS(RADIANS(long1 − long2))) ∗ 6371
𝑤𝑖𝑡ℎ Point A = (LAT1, LONG1), Point B = (LAT2, LONG2) and R = mean radius of earth = 6371 km (Boscoe, 2013).

Dr. Asmae El Mokrini is an assistant professor at the business school of the International University of Rabat. Her research
focuses on the design of pharmaceutical supply chains destined for the public sector. She works on different projects in the
field of management science with academicians and practitioners from the industry. Asmae El Mokrini earned her PhD fom
the Mohammadia School of Engineers in Rabat, Morocco and the QUARTZ EA 7393 laboratory in Paris, France. She holds a
Master’s degree in software engineering and management science and a Bachelor's degree in engineering and management
science from Al Akhawayn University in Ifrane.

Youssef Boulaksil has been a faculty member at the College of Business and Economics of the United Arab Emirates
University since September 2013. Prior to that, he was a faculty member at the School of Business Administration at Al
Akhawayn University in Ifrane, Morocco. He holds a MSc in Industrial Engineering and a PhD in Operations Management
and Logistics from the Eindhoven University of Technology, the Netherlands. Youssef also held visiting appointments at the
Nanyang Technological University (Singapore) and the Technical University of Denmark. His research focus is on supply
chain management and logistics, with a focus on emerging markets. He published a number of papers in international journals,
such as: International Journal of Production Economics, IISE Transactions, Interfaces, OR Spectrum, International Journal of
Production Research, and International Journal of Operations and Production Management. Currently, he teaches various
courses in the undergraduate program, as well as in the MBA and the MEM (Master of Engineering Management) programs.
He secured in total over $ 400,000 (USD) of research grants for different research projects in the last few years. For more
information, see: http://faculty.uaeu.ac.ae/y_boulaksil/

Abdelaziz Berrado is Department Chair and Associate Professor of Industrial Engineering in EMI School of Engineering at
Mohamed V University in Rabat. He holds a Ph.D. in Decision Systems and Industrial Engineering from ASU. His research,
teaching and consulting interests are in the areas of Big Data Analytics, Industrial Statistics, Operations and Supply Chain
Modelling, Planning and Control with applications in healthcare, education, manufacturing and other industries. He published
several papers in research journals and conferences with local and international funding. He is a member of INFORMS, IEOM
and IEEE. He was also a Senior Engineer at Intel.